Incidents:
On August 28, 2024, Ideal Auto announced financial data for the second quarter of 2024. Ideal Auto delivered 0.109 million new vehicles in the second quarter of 2024, up 25.5% year on year and 35.0% month on month. Revenue was 31.68 billion yuan, up 10.6% year on year, and GAAP net profit for the second quarter was 1.1 billion yuan, down 52.3% year on year.
Delivery of L6 increased significantly after listing, ensuring high revenue growth
Ideal Auto delivered 0.109 million new vehicles in 2024Q2, up 25.5% year on year and 35.0% month on month. Among them, the L6 led in delivery capacity after launch, and the 2024Q2 delivered 0.039 million vehicles. Ideal Auto achieved revenue of 31.68 billion yuan, up 10.6% year on year and 23.6% month on month. Bicycle revenue was 0.279 million yuan, down 13.6% year on year and 7.4% month on month. The share of mainly L6 models increased. In July 2024, the company delivered 0.051 million vehicles, a year-on-year increase of 49.4%. Looking ahead to the third quarter, Ideal Auto is expected to deliver 0.145-0.155 million vehicles, corresponding to revenue of 39.2 billion yuan to 42.2 billion yuan. The year-on-year increase in the number of models delivered is a key factor at the core of Ideal maintaining high revenue growth.
Expense rates are improved, and the scale effect is expected to increase profitability
Ideal Auto's Q2 gross margin was 19.5%, a year-on-year decrease of 2.2 pct and a month-on-month decrease of 1.1 pct, mainly due to the increase in the share of low-priced models. The Q2 R&D cost rate was 8.9%, +0.4 pct year over month, -2.7 pct month on month, SG&A rate was 9.6%, +1.5 pct year on year, and -2.3 pct month on month. The cost rate gradually improved during the period. 2024Q2 achieved net profit of 1.1 billion yuan, a year-on-year decrease of 52.3% and an increase of 86.3% month-on-month. The net profit margin was 3.5%, -4.8pct year over year, +1.0pct month-on-month. The scale effect brought about by the increase in sales volume of subsequent models led to the company's profitability or rapid recovery.
Intelligent electric strategy accelerates, ecosystem construction accelerates
The ecology has gradually improved. As of July 31, 2024, there were 487 Ideal Auto retail centers, covering 146 cities, 411 maintenance centers, covering 220 cities, and 701 charging stations and 3,260 charging stations. The progress of intelligence is accelerating, and OTA6.0 and 6.1 significantly optimize the user experience. The end-to-end and VLM architecture models were tested early at the end of July, and leading computing power and data scale are expected to accelerate the ideal intelligent upgrade.
Product strength leads smart driving upgrades, profit margins have reached an inflection point
We expect the company's revenue for 2024-2026 to be 147.3/205.4/280 billion yuan, respectively, with year-on-year growth rates of 19.0%/39.4%/36.3%, net profit to mother of 8.53/14.24/23.72 billion yuan, year-on-year growth rates of -27.1%/67.0%/66.6%, EPS 4.02/6.71/11.18 yuan/share, respectively, and a 3-year CAGR of 40.6%.
The company's product strength has been improved, intelligent electric acceleration, sales volume and profitability have been realized. Maintain a “buy” rating.
Risk warning: The speed of intelligent implementation and ability to deliver sales falls short of expectations, and the passenger car price war may affect subsequent sales.